The days of reckoning

As a hangover can follow a festive party, so a painful reminder will soon hit taxpayers who have been taking it easy at Christmas. The Inland Revenue is preparing to remind thousands of taxpayers that they must get their act together and complete self-assessment tax returns by 31 January.

But this time it will be easier for the task to slip people's minds because the advertising is likely to be more low-key than in previous years. The Revenue believes the deadlines introduced with the self-assessment tax regime are now well understood and that high-profile advertising campaigns are no longer necessary.

To avoid a last-minute tax headache, taxpayers should get organised now. There are just five weeks left to gather the relevant information, ask for any extra forms, complete the return and pay tax owed for the tax year ending 5 April, 2000. Failure to do so will result in a £100 penalty plus interest on unpaid tax.

Those who missed the 30 September, 2000, deadline for the Revenue to calculate their tax for them have two main options - work out the sums themselves or pay a tax specialist to do the job. With a 29-page tax calculation guide to plough through, the latter option can be tempting. But act fast since time is also running out for over-worked tax advisers.

Those who bought properties as an investment will have to fill in a supplementary part of the tax return declaring the income earned. Those who have a big capital gain - or loss - to declare must also fill in an extra form on top of the core tax return. These extra pages will not be sent out automatically unless a taxpayer completed one in the previous tax year.

Sheena Sullivan, tax partner with accountancy firm Pannell Kerr Forster, urges taxpayers to use quiet moments during the festive break to get started on the chore by first collecting all the information needed.

'You should keep all your 1999-2000 records until January 31, 2002, or until 2006 if you run a business or receive rental income,' she says. 'For those with rental income, there is money coming in as well as out, so it is important to keep records safely. If there are any gaps in records, taxpayers may be able to reconstruct them by getting down to the task sooner rather than later.'

Typical items of information required include bank and building society annual statements of interest, share dividend statements and, for employ-ees, the P60 form outlining earnings received and tax paid, and the P11D document outlining any taxable benefits. Sullivan warns against rushing the job and sending off an incomplete tax return.

She says: 'It will be automatically rejected. If you have benefits in kind, such as a company car, you must put down a figure for your taxable benefit. Just reporting 'per form P11Dî or 'as PAYEî is not acceptable.'

The Revenue will be able to open an inquiry into your return by serving a notice before 1 February, 2002 - and it does not have to explain why.

Anyone who misses the 31 January deadline has just under a month to file before triggering the next penalty of five% of tax owed, plus interest.

Jim Tighe, a retired owner of a photocopier repair business, prefers to relax over Christmas and not worry about his tax return. That is why he has always paid someone else to complete the forms for him.

Jim, 66, who lives near Hampton Court, Middlesex, with wife Jillian, 61, says: 'For the past three years I have used Help the Aged and it has gone very smoothly. I am careful to store away all relevant information in a box file, which makes life easier.'

Help the Aged offers a basic service for £75, though the charge is higher for more complicated tax affairs. The organisation normally needs 28 days to process the form, but can do it faster for an extra charge.